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Considering you questioned my ability to read you should you should probably read a little better yourself.Straw man argument. I asked you to read the article because it was very clear that you were putting words in my mouth without reading it. camping says
Although it does not explicitly state “for a few years,†it’s clear that the above logic can be applied long term.LOL! I still fail to connect between your argument of bank delaying foreclosure for "a few years" until home values go up again (which in turn allows bank to foreclose eventually, kick out "squatter" and sell it in higher price), and that specific discussion which eventually ended in following comment.
I think I’m probably not gonna say this again. But I agree. This can’t continue. What I’m looking for is that simple causal process that will break something. Logic you say? Well set axioms, set rules, and show me a logical progression that leads from here to a contradiction of those axioms, thereby implying that this “can not†go on forever. I went short on the home builders in 2006, and banks n 2007. We all saw the exuberance. But now we don’t see as much because it’s happening behind closed doors. The game is being fixed. This is why we’re discussing things here. Pre-2008 was easy, the rules weren’t changing. Now they are, and in the face of this fact, we’re trying to see (1) What has changed and (2) How will that eventually fail. I guess that’s about as clearly as I can put it. I’m not saying this will go on forever, but I’m unable to find a convincing logical progression that’ll show me how it’ll end.
And in 2004, there were 14,104 sales. So no, 8,000 is not “bubble†levels of sales. It’s actually 16.1% below average.Irrespective of 2004/2003 sale numbers, it is a stretch to conclude that just because sale number of 2009 is same/similar to 2003 therefore Bay Area housing market will behave same way as it did in 2003-2007.
Some Guy saysTalk about straw man arguments. Where did I say it was going to behave the same way as it did in 2003-2007?And in 2004, there were 14,104 sales. So no, 8,000 is not “bubble†levels of sales. It’s actually 16.1% below average.Irrespective of 2004/2003 sale numbers, it is a stretch to conclude that just because sale number of 2009 is same/similar to 2003 therefore Bay Area housing market will behave same way as it did in 2003-2007.
camping saysWhile Angrish said he doesn't think it will go on forever, he also can't find a reason why it will stop and no one provided a valid one. I don't understand why you think a few years equals forever (not what you said, but what you are implying by citing this conclusion). I'm not saying it will go on forever, just long enough. One of your initial posts in this thread was to disprove the fact that low inventory is because of sales, and your justification is that banks aren't foreclosing. Well, if they did this for the past year, why is it such a stretch that they will do it for another year (thus several years)? We've had 3 month moratoriums by the fed and now CA, why is it so impossible for you to imagine them doing a 1 year moratorium when it starts getting bad again?Considering you questioned my ability to read you should you should probably read a little better yourself.Straw man argument. I asked you to read the article because it was very clear that you were putting words in my mouth without reading it. camping saysAlthough it does not explicitly state “for a few years,†it’s clear that the above logic can be applied long term.LOL! I still fail to connect between your argument of bank delaying foreclosure for “a few years†until home values go up again (which in turn allows bank to foreclose eventually, kick out “squatter†and sell it in higher price), and that specific discussion which eventually ended in following comment.I think I’m probably not gonna say this again. But I agree. This can’t continue. What I’m looking for is that simple causal process that will break something. Logic you say? Well set axioms, set rules, and show me a logical progression that leads from here to a contradiction of those axioms, thereby implying that this “can not†go on forever. I went short on the home builders in 2006, and banks n 2007. We all saw the exuberance. But now we don’t see as much because it’s happening behind closed doors. The game is being fixed. This is why we’re discussing things here. Pre-2008 was easy, the rules weren’t changing. Now they are, and in the face of this fact, we’re trying to see (1) What has changed and (2) How will that eventually fail. I guess that’s about as clearly as I can put it. I’m not saying this will go on forever, but I’m unable to find a convincing logical progression that’ll show me how it’ll end.
WillyWanker saysI don't know if your retardation was caused because your mother and father are brother and sister or because your father banged your head against the headboard each night in lieu of bedtime stories~~~regardless your condition would make you an ideal candidate for euthanasia. Just think of it as doing the world a favor, asswipe. As far as I am concerned, you can go and sit on 0bama's flag pole and 'advise' him on policy while gyrating lewdly. Just don't assume I care about your past, present or future. But thanks for sharing.What exactly is ’stupid’ about that, moron? Are you too much of an idiot to not know the difference between a Mulatto and a black man? Or are you so angered by Obama’s white mother that you can’t even get your head out of your ass? Please advise.Jesus Christ. Did you get dropped on your head when you were a baby? I would “advise†you to jump off a bridge because you are too stupid to live. Or better yet, take your white sheet and burning cross and shove ‘em up your ass.
Talk about straw man arguments. Where did I say it was going to behave the same way as it did in 2003-2007?So please elaborate what you meant with following statements when you compared 2009 with 2003
2003 was part of the bubble era. If we are seeing sales numbers similar to that, it leads me to believe that there are obviously a lot of people out there buying right now. If they are buying now even in a terrible economic environment, why would you expect buying to stop when the economy actually starts doing better?
One of your initial posts in this thread was to disprove the fact that low inventory is because of sales, and your justification is that banks aren’t foreclosing.Incorrect. I said banks are not listing their foreclosed homes (what is known as "shadow inventory") at the same pace as they did in past. Foreclosures are happening. And I posted SF Chronicle link for foreclosure database. This link is available for more than a year now and I monitored this database in regular basis. The numbers are increasing - sometime in slow pace, sometime in faster pace. So far I have never seen numbers are going down. Just to give a comparison, in Santa Clara County there were 400+ foreclosure at the same time last year. Currently there are more than 5200. On the top of that, now there are good number of foreclosures on those areas where people never saw foreclosure in past. Example, Palo Alto (including 94301), Los Altos, Cupertino (including Monta Vista), Woodside, Belmont, Mission district in Fremont. camping says
Well, if they did this for the past year, why is it such a stretch that they will do it for another year (thus several years)?Well, it is nothing unusual for banks to listing the property 3-6 months after repossessing it. Let me put it this way - banks are lousy when it comes to handling real estates. They never had good infrastructure to handle it in efficient manner. However, it did not matter in past due to three reasons 1. In past, volume of foreclosures were pretty low compare to regular housing market. Therefore, a few foreclosures did not make any impact in market. 2. As the home value increased over time (some places modestly, some places rapidly), the 3-6 months delay (or even more) delay to list/auction foreclosed property did not have impact. 3. In pre-bubble era, 20 or 10% downpayment (of non-toxic standard loans) used to cover the loss anyway. So banks did not have much to lose. But it is different time and different situation now. In some areas foreclosure volume is much bigger than regular housing market. As banks are lousy to handle foreclosed properties, they are simply overwhelmed with the foreclosures with this magnitude. This sheer volume worked against them another way - in some neighborhood multiple properties are foreclosed from same bank. So if they are listed at the same time, they would start competing against each other. As an example, let's assume in Rivermark (Santa Clara) there are five foreclosures and all are from Wells Fargo. Wells Fargo simply would not want to compete those properties against each other. So they need to stream line the foreclosed properties in such a way (probably in staggered fashion) so that competition does not happen. And they are not doing very good job (and they never did in past). This problem is more prevalent in new constructions where multiple loans were issued from same bank at the same time (remember the name Countrywide?). I know a guy who works for a bank in SF and developing software to track foreclosed properties (and their relevant information) in more efficient manner. The last news is: they are still working on it. :) So far I have seen anywhere between six months to one year delay for listing foreclosed properties. But it does not surprise me, considering the volume of foreclosures. camping says
We’ve had 3 month moratoriums by the fed and now CA, why is it so impossible for you to imagine them doing a 1 year moratorium when it starts getting bad again?Well, I am not trying to imagine anything at this moment. If I want to, I could imagine lots of hypothetical scenarios. How about this one: multiple asteroids will drop in neighborhoods where there are too many foreclosures and will destroy all the properties. Banks will collect insurance from insurance company. End of story. No foreclosed property in market, home value goes up. Or may there will be an earthquake. Basically, there are infinite possibilities to "imagine". I would like to see some facts on ground (or atleast some kind of rumors leaked from banks that they are trying to hold those properties forever or long enough). Moratoriums are band-aid solutions from lawmakers to keep citizens and local govts happy. Some banks actually resisted the idea. For example, Bank of America negotiates clouded legal waters
As four U.S. senators joined the chorus of political leaders and activists calling for a foreclosure moratorium, Bank of America continued to resist requests that it voluntarily adopt such measures on Countrywide Financial Corp. loans. "We understand the concerns that have been raised," Bank of America spokeswoman Shirley Norton told Legal Newsline on Tuesday, "and believe there are better alternatives for our customers and communities than broad moratoriums."
Please just tell me where I said anything about the market behaving like the period of 2003-2007, not just 2003, but the 2003-2007 period.Ok, may be I misinterpreted you. And I am sorry for that. But please elaborate your point about 2003 and 2009 comparison. I would like to hear it.
WillyWanker saysNo, you are proof of why your parents should not have been allowed to reproduce. Abortion would have been a blessing for you.I don’t know if your retardation was caused because your mother and father are brother and sister or because your father banged your head against the headboard each night in lieu of bedtime stories~~~regardless your condition would make you an ideal candidate for euthanasia. Just think of it as doing the world a favor, asswipe. As far as I am concerned, you can go and sit on 0bama’s flag pole and ‘advise’ him on policy while gyrating lewdly. Just don’t assume I care about your past, present or future. But thanks for sharing.This is why cousins shouldn’t marry.
pkowen saysFunny how pointing out 0bama's Mullato heritage has riled you into a frenzy. The fact that his mother was white is something you just can't handle. BitterMuch?I thought this was a housing forum …No, it’s obviously the white supremacist forum.
Your long paragraph talks about how slow banks are, yet you find it unreasonable that they may take years to unload foreclosures if they are flooded with them.Because I am debating against the argument for reason for delay (not the outcome). Initially you alluded to point that bank would hold properties because they don't want to sell them (to keep inventory artificially lower). I am saying that it is not that they want to, but they have to - because most likely they don't have infrastructure to unload faster. In addition, moratoriums are slowing down foreclosures (hence repossessed properties coming back to market in slower rate). camping says
As you said, they may have to stagger properties as well. Well, if they have 5 in one area and each takes 1 month to sell, then you have a delay of 5 months for the last one, no? Again, if there is a flood of foreclosures, they will stagger them over a longer period of time, which could take several years.You have to ask yourself, why there is staggering? Because there are there are already too many foreclosed properties in the market, and some of them from very same bank. And if there are too many in market, that defeats your initial argument that banks are intentionally not listing foreclosed homes in market. I don't think anybody would care (except bank itself) if certain foreclosed properties are taking one year to come to market. You have to see how many foreclosed properties are already in market. Rapid inventory will depress the home value in faster rate, and slow increase of foreclosed properties will do it in slower rate. That's the only difference. In the end, what matters is the market trend. So far it's only downwards and no sign of going upward.
n short, it was related to how everyone thinks we’re in the crapper, jobs are being lost left and right, yet there are still a decent number of sales going on. If/when the economy picks up, I would think sales would pick up even more. We’ve only spent like $60B of the $800B+ of the stimulus package and there may be second stimulus package.First, just sale volume (and nothing else) is not a good metric to gauge market. Even in worst housing market, there will be certain amount of sales. You have to look at the underlying factors for sales. In 2009 32% sale volume is driven by foreclosure sale. What was the number in 2003? It was definitely not 32%. In fact if there are more foreclosed homes in market, there will be even higher volume sale - probably even higher than 2004/2005 numbers. It does not demonstrate that health of the market is positive. BTW, in 2002-2003 Bay Area was indeed in bad shape. Unemployment in hitech sectors were pretty high. So today's scenario is not exactly same, but not all that different either. However, people's mentality was lot different. In 2003 people used to consider real estate is a safe investment - after losing money on stocks and evaporating stock options. So people were willing to buy house, even if they were expensive. But today not many people think same way. Today's volume of sale driven by different mentality - opportunity to grab foreclosed properties in cheaper price (at least cheaper than two years back).
Most of what you said contradicts itself. The banks don’t have the means to unload foreclosures, but the market has too many foreclosures, but they are staggering their foreclosures, and they aren’t doing it to keep inventory lower, yet rapid inventory will depress home values faster.It is not contradiction, but the complexity of the current situation. - Yes, banks don't have means to unload foreclosures in faster rate. - Yes, market has too many foreclosures. - Yes, they are staggering their foreclosures. - Yes, they are not doing it to keep inventory lower. - Yes, rapid inventory will depress home value faster. It's the complexity of current housing market. And I don't think anybody can describe it with simple one liner. So, where is the contradiction?
y current view (changes from time to time) is that a slow drop in home values will be offset by inflation and higher mortgage rates to the point where buying in the near future if you can get a deal may be a better option than waiting until 2012.Any given day I would prefer higher interest rate + smaller principal than lower interest rate + bigger principal. Because in later case, the risk is much lower - especially in this volatile time.
camping saysI agree smaller principal + higher rate is much preferred. But you may not get that. With a slow drop you may only get slightly lower principal and much higher rate. My concern: $700k house now w/ 5.5% rate versus 2012, $650k w/ 8% rate.y current view (changes from time to time) is that a slow drop in home values will be offset by inflation and higher mortgage rates to the point where buying in the near future if you can get a deal may be a better option than waiting until 2012.Any given day I would prefer higher interest rate + smaller principal than lower interest rate + bigger principal. Because in later case, the risk is much lower - especially in this volatile time.
My concern: $700k house now w/ 5.5% rate versus 2012, $650k w/ 8% rate.The above statement defies the long term trend of housing market. When interest rate goes up, home value adjusts accordingly. The whole issue boils down to affordability - how much mortgage people can pay per month.
camping saysNot true: http://mysite.verizon.net/vzeqrguz/housingbubble/My concern: $700k house now w/ 5.5% rate versus 2012, $650k w/ 8% rate.The above statement defies the long term trend of housing market. When interest rate goes up, home value adjusts accordingly. The whole issue boils down to affordability - how much mortgage people can pay per month.
If they don’t have the means to unload foreclosures, then how does the market have too many foreclosures? They got there somehow.LOL! There could many many many reasons for too many foreclosures. Let me try to think one of them - they are not selling? ;) In redfin I can show property where bank is reducing price $25K every month for last six months. camping says
If they are staggering foreclosures, then they are doing it to keep inventory lower (avoid competing with themselves) to avoid depressing home values.Effect of staggering is lower inventory than it is supposed to be. But basic purpose of staggering is to avoid having similar properties from bank in same neighborhood (not lowering the inventory). camping says
Similarly, if they know rapid inventory will depress home values, how can you say they are not doing it to keep inventory lower?It boils down to what they want to do with foreclosed home. From bank's point of view, a foreclosed home is trapped money which they cannot invest anywhere else (lost opportunity). Time goes by, they lose the opportunities to do so. In addition, the foreclosed inventory is not owned by one bank that they can control the whole market. There is always multiple banks competing with each other. So there is always a rat race - a typical behavior of market.
Not true: http://mysite.verizon.net/vzeqrguz/housingbubble/How exactly the above chart draws relation between interest rate and home value? Yes, interest rate factors into inflation, but not always. You should compare above chart with interest rate chart. Couple of things to note - Sometimes home value peaked (in early 80s and late 80s) while interest rate started climbing up. My conclusion is that it is the similar perception, as you are saying now ("buy it before interest rate goes up"), that drove the price up, only to fall farther down (and fall was spectacular in late 80s SF bay area). - Although sometime interest rate was lower (especially mid 90s), home value did not increase accordingly. My guess is that it is related to median income.
Maybe the President of ZipRealty has ulterior motives for saying this, but if it is true, it seems to contradict your points.Well, I never doubted about ulterior motives of people from real estate industry. :) And I can't count enough how many times I disagreed with them.
Yes, and median income is generally related to inflation.Again, not all the time. In last 10 years median income did not increase (in real term or actual dollar value), although 2005-2008 inflation was pretty high. Same argument goes for early 80s. median income chart Inflation charts Because there are other factors like GDP. In addition, different demographics have different curves - depending on local job growth (e.g hitech job growth in bay area in last 90s).
I thought we were talking about long term trends; now you’re picking very short periods to compare.Hmmmm, so I am assuming the decision whether to buy home now or in 2012 (different is only three years) is got to be based on 30 year long term trend. I would recommend you to look at all the small/large bumps in interest rate chart and check how they affect home value.
camping saysI think you should do the same. Historically, when mortgage rates were high, home values went up with the exception of the past few years. I would imagine you agree house prices generally track inflation. Interest rates are higher with higher inflation (generally). Therefore, when inflation is high, mortgage rates are high, and house prices go up.I thought we were talking about long term trends; now you’re picking very short periods to compare.Hmmmm, so I am assuming the decision whether to buy home now or in 2012 (different is only three years) is got to be based on 30 year long term trend. I would recommend you to look at all the small/large bumps in interest rate chart and check how they affect home value.
I think you should do the same. Historically, when mortgage rates were high, home values went up with the exception of the past few years. I would imagine you agree house prices generally track inflation. Interest rates are higher with higher inflation (generally). Therefore, when inflation is high, mortgage rates are high, and house prices go up.LOL! I don't know how to answer this one. When mortgage rates were high, home value went up - that's a news to me. Past few years mortgage rates were high? I thought the whole housing bubble was created by combination of lower interest rate and ninja loans.
camping saysYou can answer it by looking at the charts. Yes, the past 8 years were an exception partially based on easy credit. What were mortgage rates like in the early 80's? What does the chart show for home prices? http://mysite.verizon.net/vzeqrguz/housingbubble/I think you should do the same. Historically, when mortgage rates were high, home values went up with the exception of the past few years. I would imagine you agree house prices generally track inflation. Interest rates are higher with higher inflation (generally). Therefore, when inflation is high, mortgage rates are high, and house prices go up.LOL! I don’t know how to answer this one. When mortgage rates were high, home value went up - that’s a news to me. Past few years mortgage rates were high? I thought the whole housing bubble was created by combination of lower interest rate and ninja loans.
What were mortgage rates like in the early 80’s? What does the chart show for home prices?If I am reading the chart correctly inflation adjusted home price dropped between 1980-1984 (from $150K to $130K). As I have explained already the price went up when interest rate started increasing (because very same psychology "buy before interest rate goes up farther"), but eventually price fell.
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